Some handy features of user car loans

Dailybhaskar|Nov 22, 2012, 12:59PM IST

New Delhi: Though new car models and discounts on slightly older car models come in by the day, the lucrative offer of buying an used car also seems equally attractive to the Indian buyers. The reason attributed to this is, that the cars are an ever depreciating asset whose value always declines over time, espcially the mass consumer segment. This puts certified and well maintained used cars as attractive options for buyers these days, who also fall for the larger discounts that come with it. And like new cars, used cars are also financed by banks but on certain commonly assumed terms. Here is a few of those features and commonly accepted terms on used car loans, just in case you may be planning one:

- The price of the car is taken on road, along with a price margin of around Rs 25,000 for registration, insurance, and acessories which may be needed. The loan offered is generally 60% of the on-road price, which could be given concessions for upto 85% coverage at maximum. There will be processing fees of 0.5% applicable on the used car loan as in any conventional new car loan.

- The normal tenure for repayment of used car loans ranges from 3 to 5 years and not extendable beyond that. The actual EMIs for used car loans may be lower than that for a new car loan in most cases. The rate of interest applicable will be as per the terms and conditions stipulated by the particular financier.

- The downpayment of any of the loans will not be less than 15% on the price of the car. There shall be no upfront installments required in case of used car loans as is the case of some types of car loans for new ones.

Some essential pointers

- The private lenders will always have a need for lesser documentation to process and sanction the loan on an used car, than most public sector banks.

- The repayment tenure being shorter the EMIs in a used car loan tend to be higher which one has to be prepared for.

- If the need arises, there can be reasonable amount of bragaining which one can do for interest rates, downpayments, processing fee, and repayment tensure in used car loans as compared to new loans.